Viacom owner of MTV, Nickelodeon and Paramount had another disastrous quarter. They have been the canary in the coal mine teenagers these days have never even heard of MTV. These days kids are watching Youtube and Netflix. Some small cable companies have ditched Viacom with minimal impact on subscribers and importantly no regrets. Unfortunately Viacom's channels are no longer must have.
Time Warner the owner of HBO received 43 Primetime Emmys 12 for Game of Thrones they have some of the most must have content. They released HBO Now direct online like Netflix a year ago but even they have seen disappointing subscribers with 800,000 paying customers most expected 1-2 million subscribers. The rest of their networks like Turner are also facing ratings challenges.
That leaves us with Disney. They reported the biggest profit in history thanks to Star Wars but investors shrugged. Now that Star Wars is out the way investors are focused on cable cord cutting. The CEO Bob Iger gave an impassioned defense of the bundle. ESPN is still the must have part of the cable network, 81% of cable subscribers watch ESPN. The situation is bad enough that an analyst asked if Disney would split the network from the theme park business. That isn't going to happen but the CEO replied that media networks have grown 8% a year while the rest of the company grew 23% reducing reliance on this division. We believe Disney is the most interesting media stock because of its brands and diversification of revenues. Unlike MTV their brands still mean something to customers. They have some of the best known characters in the world that will likely be around forever much like consumer staple brands. Concerns around cable cutting will remain but when Procter and Gamble trades at 20x and Disney 15x earnings it's hard to get too negative against the House of Mouse.
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